Transfers to Revocable Trusts, LLCs: Remember title insurance implications. Case (applying Virginia law) reminding us that transfers to LLC's, Revocable Trusts, etc. for convenience or estate planning motives terminates the title insurance policy. Prudent practice would be to secure an endorsement to the policy naming grantee as additional insured. Click here to view reported decision

No Recordation/Transfer Tax Due on a Bankruptcy Deed. In a Chapter 11 proceeding, even if a deed is granted before a plan is confirmed, an Order of the Bankruptcy Court that indicates that the transfer is to be free of taxes pursuant to 1146(c) of the Bankruptcy Code will be sufficient to exempt the deed from taxation and 1146(c) is not limited to transfers after confirmation of the Plan. In re Beulah Church of God in Christ Jesus, Inc. 316 B.R. 41 (S.D.N.Y. 2004).

VA: House Bill 1586 passed which limits the amount to $10 that a settlement agent may charge for complying with any requirement imposed by 58.1-316 or 317. While this amount appears modest, the bill, introduced by Gary A. Reese, was in response to a bill introduced by David B. Albo which would have prohibited any charge at all.

DC: Uniform Real Property Electronic Recording Act is now law in DC, effective October 18, 2005. 42 D.C. Code 1231

DC: Electronic Recording: When Viewable and Effective Date of Recording. A letter was written to Larry Todd, District of Columbia Recorder of Deeds, by Roy Kaufmann outlining the legislative directive that electronically recorded documents should be available for viewing on the internet upon recordation (rather than holding off publication until "paper" documents filed the same day have been processed). Further support was given for the proposition that electronically recorded documents should have an effective date/time of recording, rather than the date/time of review and acceptance by the Recorder. Click here to See Letter

DC: Proposed Law to Cap Increases on VACANT Residential Rental Units: Councilmember Graham is proposing legislation that, among other things, seeks to cap increases on vacant rental units. If you missed the notice of hearings, you can see it here: Click Here to See Notice

DC: Retroactive Assessments Upon Sale of Real Property: The D.C. Land Title Association had a productive meeting with Martin Skolnik, the new director of the Real Property Tax Administration. An issue raised was the inconsistent handling of real property tax situations wherein OTR sought to collect taxes on a property after a closing had taken place. Specifically, instances were arising where Homestead Deduction, Senior Citizen, 12% Cap, and changes in class and assessed value were being charged to the purchaser, for a period that predated closing. The issue was summarized in a letter and accompanying chart which demonstrates the limitations upon OTR for such assessments. Also included are excerpts from pertinent portions of the statutes. Click here to see letter and chart.

DC: Suggested Title Insurance Requirements for commercial properties in DC. Often the failure to file an Income & Expense Reports for commercial or hotel properties results in an assessment by OTR for a period after conveyance. A suggested requirement is: "Evidence must be submitted of the timely filing of a properly completed and duly executed Income-Expense Form ("FP-308 B") or Hotel/Motel Income and Expense Report ("FP-421B") in connection with any income producing or investment-type property. Filings are due on or before April 1st of each year."

VA, MD, DC: Candace Evans of Holland & Knight shared with us the Revised 2005 ALTA/ACSM Survey Requirements.
Click here to see redline changes from prior Survey Requirements.
Click here to see Final Revised ALTA/ACSM Survey Requirements

DC: Tenant Opportunity to Purchase Act and Rental Housing and Conversion Sale Amendment Act of 2005. Many of our readers will recognize the controversial and expansive changes to TOPA that went into effect in July 2005. Notwithstanding the assurance in the statute that regulations would be promulgated to assist land professionals and title underwriters in navigating this dangerous territory, no regulations have been adopted. Nor, does it appear, has a penny been allocated to provide the administrative law judges who are to oversee these issues. Nor has a task force been established within 30 days of the effective date of the Act, as required by the Act. These concerns have been raised to the Department of Consumer and Regulatory Affairs, with copies to all members of the D.C. Council.
Letter to DCRA from DCLTA of August 29, 2005
Follow-up Letter of 10/25/05 because of no response

No Equitable Subrogation available for title agent's mistake. Citicorp, during the course of a refinance of one of its loans, instructed the closing agent to obtain a release on Shelby Bank's outstanding second deed of trust. Shelby offered to subordinate, but Citi insisted upon release. Settlement agent closed the Citi loan (without paying off Shelby), released the existing Citi first deed of trust (moving Shelby to first position) and recorded the replacement Citi Deed of Trust. Borrower defaulted on the Citi loan, and Citi started, but did not complete foreclosure proceedings because it saw the continued presence of the Shelby mortgage. Citi put their foreclosure on hold, and yelled at the title agent to obtain a release. Meanwhile, Borrower defaulted on the Shelby loan and Shelby foreclosed. Citi woke up, filed suit to claim priority over Shelby (remember, in this case Shelby was not paid with Citi funds), claiming priority over the Shelby mortgage. "Equity aids the vigilant, not those who sleep upon their rights". Court held that there was no equity in favor of Citi because Citi knew about the Shelby loan before they closed on the refi. Citi could have chosen to refuse to make their new loan, or advanced sufficient money to payoff Shelby in order to ensure first lien position. Citicorp Mortgage, Inc. v. Bancorp South Bank 2004 WL 2715278 (Tenn. Ct.App 2004)

DC: Status of DC Legislation: Given the number of bills pending and passed, the list has now been posted rather than listed here in the newsletter. Click here for Pending/Recently Enacted Legislation

Upcoming Seminars, Continuing Education and Events:

The holiday gathering for the DC Land Title Association is set for December 6, 2005. For information please contact the Association's Secretary, Pauline Haynes at PHaynes@Jackscamp.com.

Please feel free to circulate this newsletter to others in the industry, both within and outside your office. The contents of this Update are intended for general informational purposes only and should not be relied upon as legal advice or as a substitute for consultation with a qualified attorney. Moreover, the mailing hereof is not intended to create nor does it constitute an attorney-client relationship.

Sincerely,

Roy L. Kaufmann of the Real Property and Asset Management Group
Jackson & Campbell P.C.